This chapter looks at the revolution that technological advances in communication technologies has created for electronic (B2B). It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes. The increased use of automated business processes and communications based on the transfer of electronic data is to acheive greater efficiency in business processing.
E-business connections :
Back Office
Internal processes such as distribution, manufacturing, and accounting
Quickbook, a small business accounting software product, adds the ability to track issues relating to Workers' Compensation issues. As the author of this article notes, the ability to track these issues within previous versions of Quickbooks did not exist without painstaking "workarounds". This example of a "back office" software enhancement will most likely lead to a more efficient use of staff's time relating to this task.
For many years, I’ve been wishing for an automated system of tracking, accruing, job costing, paying, and reporting on workers’ compensation in QuickBooks. I developed several workarounds for accruing and job costing workers’ comp, but, to be honest, these workarounds almost always required too much technical understanding from the user, and way too much babysitting of the process. So I only offered the workarounds for those who had no other choice. Alas, with recent updates to QuickBooks and its integrated payroll services, you can now handle pretty much everything you need for workers’ comp. An Overview of Workers’ Compensation Using the Enhanced Payroll Service
QuickBooks provides a Workers’ Compensation Setup wizard that walks you through the setup of the Workers’ Compensation feature. This wizard prompts you to (1) assign default workers’ comp codes for each employee, (2) decide whether you want to exclude overtime premiums from workers’ comp premium calculations, and (3) enter an experience modification factor, if you have one.
Front Office
External processes such as those that connect an organization to its customers and suppliers
Modes of Processing Business Events:
Periodic
A processing mode that uses batch processing which results in delays between data processing steps.
Almost all manual systems use this mode
The disadvantage is the only time the master data is up to date is right after the processing is completed.
There is never a point in time when a manager or decision maker has up to date information to use to make their decisions.
Given the rapid improvements in information technologies, periodic mode systems are becoming less common for most activities.
Batch
A processing mode where an aggregate set of business events performed over some period of time are processed as a group by the information system, also results in delays between data processing steps.
As with Periodic, there is never a point in time when a manager or decision maker has up to date information to use to make their decisions.
Immediate
A processing mode in which little or no delay occurs between any two data processing steps. Processing happens in "real-time." Example: Enterprise Driven Architecture
E-business: Security & Fraud
If your business is connected to the internet, it’s your responsibility to protect your business data and information against unwanted intruders. Sensitive information such as customer details, pricing lists, and personal records can all be stolen, corrupted or even destroyed unless protected properly.
You should ensure that your connection to the internet is secure. Some issues to consider when securing your website are:
A firewall is simply a program or hardware device that filters the information coming through the internet
connection into your private network or computer system. If an incoming packet of information is flagged by the filters, it is not allowed through.back up data
using secure passwords.
Things you need to know and do to operate safely online: For small business
Methods for capturing e-business events:
Automated Manual Systems (4 steps)
Business Event Occurs
At the point of occurance for the business event, the information for the event will be recorded on a source document
Record Event Data
A batch of source document will be transferred to a data entry operator who will take the information from the source documents and enter the data, using an offline device, in a computerized format. The business event data are usually entered using an offline device. The resultion computerized format becomes the sales event data store.
Update Master Data
After all the data has been entered into the system, the sales event data store is brought to the computer to be processed, and any calculations and summerizations completed. This information is used to update the master data.
Generate Output
After all the calculations have been completed and the data updated, the system will periodically generate the applicable reports.
The output is only as good as the last Master Update, which in turn is only as good as the last Batch Processing and so forth.
This form of automated system is a pure periodic system. The entire process uses a periodic mode of processing. A disadvantage of periodic mode systems is that the only time the master data is up to date is right after the processing has been completed. As soon as the next business event occurs, the master data is no longer up to date. As a result, a query capability is not provided for data that are used in a periodic mode system.
Online Transaction Entry (OLTE)- This system captures, validates and stores large amounts of transactions. It is optimized for data entry operations and consist of large amounts of relatively short amounts of short database transactions. For example, an Order - Entry system. The use of data entry devices to allow business event data to be entered directly into the information system at the time and place that the transaction occurs (p75). At the point of the business event, a computer input device is used to enter the event data into the data entry system rather than onto a source document. The input system usually also will serve as a printer that will then print document copies to serve the need of source documents. As business events occur, they are usually accumulated either on magnetic tape or on disk. Can be used in periodic or batch processing systems. Online transaction entry reduces redundancies in pure periodic mode processing. The OLTE is better than the Automated Manual System, however, the information is still not up to date at any given time for the decision makers.
On Line Transaction Entry-- A type of computer processing in which the computer responds immediately to user requests. Each request is considered to be a transaction. Registering students for classes or updating employee benefits are examples of transaction processing.
Online Real-Time (OLRT) (3 steps)- Systems that gather transaction data at the time of the occurence, update the master records essentially instantaneously, and provide the results arising from the transaction within a short amount of time (p77).
3 Steps
Business event occurence and recording of event data
Update master data
Generate reports and support queries
Online Transaction Processing (OLTP)- Handling transactions as soon as they occur providing immediate responses to users. This is especially useful for banks and insurance companies. Deposits, withdrawals and other transactions using ATMs are examples of online transaction processing.
There are multiple ways to define OLTP and they are as follows below:
- A type of computer processing in which the computer responds immediately to user requests. Each request is considered to be a transaction. Registering students for classes or updating employee benefits are examples of transaction processing.
- Any number of concurrent users adding and modifying data. Typically includes order processing, banking, stocks, and e-commerce applications.
- A common term used to describe any form of transaction processing may involve communication devices and data processing environments.
- The primary use of databases such as Oracle, Sybase and Informix. Enables instant access of newly entered information throughout the enterprise.
Methods for conducting E-Business:
E-mail
The electronic transmission of non-standardized messages between two individuals who are linked via communications network (usually the internet or the intranet). This requires human interaction. Its unstructured nature as a communication mode makes data capturing more difficult and generally requires human translation and entry of the data, which increases the likelihood of error. Using web and Internet technologies in conducting the business activities. Also expanding end enhancing traditional business practices by means of the Internet. Electronic Mail (E-Mail, email) one of the most popular Internet services. Basically it's the transmission of text based messages. An email message can also contain more structured elements, like tables, images and multimedia. It can also be used to send various data files, by means of attachments.
E-mail tends to be a very free-form mode of expression and a fairly casual and informal mode of communication. This unstructured nature of communication mode makes data capturing more difficult and generally requires human translation and entry of the data. This increases the likelihood of error and requires more stringent data control procedures to be in place. The E-mail essentially becomes a source document for use in the business event data processing. Organizations using e-mail as source documents also must have in place a mechanism to deal with unsolicited, non-document mail (SPAM). SPAM is flooding the Internet with many copies of the same message, in an attempt to force the message on people who would not otherwise choose to receive it. Most spam is commercial advertising, often for dubious products, get-rich-quick schemes, or quasi-legal services. Spam costs the sender very little to send -- most of the costs are paid for by the recipient or the carriers rather than by the sender.
Despite the limitations, e-mail does have several characteristics that make it tolerable for some E-business events. From a sales standpoint, a targeted market can often be identified by locating an appropriate e-mail list. Much like their mailing list counterparts that are used for postal delivery, lists of e-mail addresses for individuals that are likely to be interested in a given product can be useful. Generally, if the marketing medium is e-mail, then the purchase request also will be transmitted in this manner.
Electronic Document Management (EDM)
The capturing, storing, management, and control of electronic document images for the purpose of supporting management decision making and facilitating business event data processing.
In general, business applications of EDM fall into two categories:
1. Document storage and retrieval. For example, mortgages , deeds, birth certificates marriage licenses, banking-acocunt signature cards and other documenta are archived and made available to the public for such uses as titile searches. An EDM system stores the images of these items and diplays or prints a copy of them upon request.
A recent example of EDM is the Check 21 law that was enacted in 2004 to allow banks to substitute electronic images for paper checks. For more information on this law see http://www.federalreserve.gov/paymentsystems/truncation/
2.Business event data processing. For example, loan and insurance applications must pass through several stages, such as origination, underwriting, and closing. The EDM system can manage the workflow and route the documents to the appropriate people - even if these people are geographically dispersed. Benefits of EDM include:
- reduced cost of handling and storing paper;
- improved staff productivity;
- superior customer service ;
- enhanced management of operational workflow;
- faster processing. Applications with a high chance of success:
-a large amount of paper is produced and stored
-data must be scanned
-frequent access to the stored data from geographically dispersed locations is needed
-processing of the stored data are extensive and complex and takes place from multiple locations
Electronic Data Interchange (EDI)
Computer - to - computer exchange of business data (i.e. documents) in structured formats that allow direct processing of those electronic documents by the receiving computer system. Human interaction is eliminated.
Benefits:
Responsiveness to customer' needs
Processing costs are reduced and accuracy is improved.
Mailroom and other document preparation and handling costs are eliminated
Forecasting and analysis and cash flow are improved
Chance to rethink and redesign existing processes and controls
Costs
Modifying trading relationships and negotiating contracts
Buying or leasing hardware and software
Establishing relationships with VANs and negotiating contracts
Training employees
Reengineering affected applications
Implementing security, audit, and control procedures
ELECTRONIC DATA INTERCHANGE (EDI):
The Textbook’s definition of Electronic Data Interchange (EDI) is: EDI is the computer-to-computer exchange of business data (i.e., documents) in structured formats that allow direct processing of those electronic documents by the receiving computer systems. However, reviewing the IT/IS existing literature, I found an alternative definition of EDI, that is more detailed, operational, and more accepted in practice. Electronic Data Interchange (EDI), in broad terms, represents the replacement of business, administrative or other organizational documentation by standard electronic messages, which are passed directly by telecommunications from one organization’s computer system to another without ever existing in paper form.
Historically, EDI was originated primarily for finance and trading purposes as a means of speeding up and automating the transfer of information. Following its success, it has expanded to include a wide variety of other information such as that relating to general business, accountancy, health, education, and so on. (Williams et al 1997)
In addition, EDI has been found to have an effect on auditing, where there are control problems related to determining the boundaries of legal responsibilities, the establishments of audit trails, systems security, and so on. However, the main concern for traditional auditors facing an EDI environment, is the apparent erosion of control through the lack of visible evidence. For example, it is impossible to place a grid stamp on an electronic document and provide an authorization signature. Furthermore, as EDI enables information to transcend organizational boundaries, business functions in two organizations may overlap so that an audit trail may become ambiguous or even lost. For example, the transfer of liability for, or ownership of, goods and associated information are vague and the organizational boundaries are blurred in areas where the use of electronic reservations and bookings in the air freight and shipping industries, the use of Automatic Teller Machines (ATMs) to withdraw money in banking and the delivery of goods for customers with an electronic dispatch advice. (Maingot, 1997)
According to Mehta (1998), many companies are starting to take advantage of the EDI technology either due to potential benefits offered by EDI or due to customer pressures, and there are a number of risks and exposures that businesses need to be aware of when considering leveraging this technology. To mention few, total dependency on the system, loss of confidentiality of data, unauthorized transactions and fraud, concentration of control, reliance on third parties, and the potential legal issues are all exposures, that the control considerations, would include a whole set of controls should minimize them.
Internet CommerceInternetInternet Commerce
Google recently started a new online payment service called Checkout. It allows consumers to enter their personal and financial information only once (with Google) and purchase goods from other vendors that are associated with the Checkout program. Google forwards the payment to these vendors.
Another example of Internet Commerce is Amazon.com. It was one of the first major companies to sell goods over the internet. Amazon began as an online bookstore, though it soon diversified its product lines, adding DVDs, music CDs, computer softwares, video games, electronics, like mp3 players, apparel, furniture, food, and more. Amazon has established separate websites in Canada, the United Kingdom, Germany, Austria, France, China and Japan and it ships globally on selected products.
Internet market exchanges bring together a variety of suppliers in a given industry with one or more buyers in the same industry to provide internet commerce through organized markets. Suppliers can put their products online, generally feeding into electronic catalogs that allow the buyer(s) to sort through alternatives from different suppliers and electronically place an order. Internet market exchanges can be either private or public.
The Internet is radically changing the nature of E-Business to the point that in the future, the Internet will become the dominant platform for not only E-Business , but EDI as well. Even though EDI is expected to survive and grow, the Internet shows far more potential growth.
Two primary categories of e-Business exist over the Web: 1) business to consumer, or B2C (Internet stores, etc.), and Business-to Business. Internet commerce has traditionally referred to the first category, business to consumer likage, although recently more B2B commerce is taking place over the Internet.
Business to business connections can be made either through direct access (very costly) or through an Internet Service Provider (virtually cost less). Some examples of ISP's are AOL, NetZero, BellSouth, and PeoplePC.
>
* Other Internet Uses for Business
Improve ongoing customer support. Companies are able to provide customer self-service, such as check packages information and manage bank account information.
Create direct linkage between customer and vendor, reduce costs for organizations.
Internet Auction Market – provide an internet base for companies to place products up for bid or for buyers to put proposed purchases up for bid. eBay has become the fastest growing company in American history.
Most Internet auction sites specialize in person-to-person activity where individual sellers or small businesses sell their items directly to consumers. In these auctions, the seller — not the site — has the merchandise, and often, the site will not take responsibility for any problems that may arise between buyers and sellers.
>> How is Internet Auction Works?
>> · Most Internet auction sites require buyers and sellers to register first and obtain a “user account name” (or “screen name”) and password before they can make bids or place items for bid.
>> · Some sites require sellers to agree to pay a fee every time they conduct an auction, whether the item is sold or not. Other sites charge a fee only when an item is sold.
>> · Many sellers set a time limit on bidding and, in some cases, a “reserve price” — the lowest price they will accept for an item. When the bidding closes at the scheduled time, the item is sold to the highest bidder. If no one bids at or above the reserve price, the auction closes without the item being sold.
>> · Some auction sites allow sellers to set a price at which a buyer can purchase the item without competing with other bidders. A buyer can choose to purchase the item for the price the seller has set, without bidding.
>> · At the end of a successful auction, the buyer and seller communicate — usually by email — to arrange for payment and delivery.
>>
Internet Market Exchange – bring a variety of suppliers in a given industry with one or more buyers to provide internet commerce through organized markets. Basically, suppliers provide electronic catalogs and buyers can place orders electronically to avoid the purchase order process.
The Effect of E. Commerce on Auditing
In the past decade, an important characteristic of the current information age, or the digital age (as recently labeled), has been, foremost, the popular development of the Electronic Commerce (E-Commerce). Just as with almost every type of product and service that E-Commerce, the most accessible application that brings together the buyers and sellers, auditing, as an important professional service, couldn’t afford to stay static in such a dynamic and virtual market place.
In accounting and auditing literature, the impact of E. Commerce, whether in the form of a Business to Business (B2B), Business to Consumer (B2C), or Consumer to Consumer (C2C) has been emphasized. For example, Burr et al (2002) described the influence of the internet’s E-Commerce on auditing at Morgan Stanley, a multinational financial services corporation with 58,000 employees in 28 countries around the world.
He stated that: “At Morgan Stanley, our internal auditors share a unique control framework developed during the dot.com craze, and they proactively addressed the challenges presented during e-commerce boom by tailoring our methods to this unique form of business. These challenges that E-Commerce has imposed on today’s business environment has brought with it new issues for the entire organizations to face, and auditing is no exception, such issues as; security, application integrity, development process and the legal issues that involve conducting unusual business on-line. If this example does anything, it will definitely add to our understanding of how IS audit will, eventually, replace the traditional audit trails.
Miscellaneous (but important) Concepts:
Assurance providers (who, why, how)
Assurance services- 'Independent Professional Services that improve information quality or its context'. Such services are very broad and could include assessments of internet security and quality of health facilities (wikipedia).
Who
CPA or CPA Firm.
VeriSign-provides a variety of security and telecom services, including digital certificates
VeriSign Inc (NASDAQ: VRSN) operates intelligent infrastructure services that enable and protect billions of interactions every day across the world’s voice and data networks. Every day, we process as many as 18 billion Internet interactions and support over 100 million phone calls. We also provide the services that help over 3,000 enterprises and 500,000 Web sites to operate securely, reliably, and efficiently. VeriSign is a global enterprise with offices throughout the Asia-Pacific region, Europe, Latin America, and North America, supported by a widespread international network of data centers and operations centers.
As next-generation networks emerge, VeriSign will be there, deploying the intelligent infrastructure services necessary for everything from RFID supply chains, to inter-enterprise voice over Internet Protocol (VoIP) to the seamless delivery of mobile content. Whether you’re a carrier looking to rapidly deploy new services, a Fortune 500 enterprise needing comprehensive, proactive security services, or an organization looking to evolve its trading-partner network, we can help. We’re VeriSign. Where it all comes together.
Certificates can be used to verify that Public Keys belong to an individual
WebTrust is a seal of assurance service developed jointly by the AICPA & the Canadian Institue of Chartered Accountants.
The WebTrust seal demonstrates that a Web site has been examined by a qualified CPA who has verified that it complies with the WebTrust Principles and Criteria(wikipedia).
Value Added Network Service:
A packet-switched network service that provides communications capabilities for organizations not wishing to obtain their own packet-switched or dedicated communication links
In an EDI system it basically
Logs the message
Translates the message to required communication standard (if necessary)
Translates message to required EDI standard (if necessary)
Encrypts and authenticates the message (if necessary)
Checks the message integrity
Routes to the appropriate mailbox
A VAN service acts as the EDI "postman"
What is the difference between Online Transaction Processing and Online Real-Time Processing?
An Online Transaction Processing (OLTP) unit will retreive data from the master data and then use that data for a particular transaction. The master database will not be updated until the processing is complete. Online Real-Time Processing (OLRTP)would send the intermittent data to the server for processing - creating a greater need for powerful processing on the receiving server end. The text book uses automatic teller machines to exemplify OLTPs.
Today's online transaction processing increasingly requires support for transactions that span a network and may include more than one company. For this reason, new OLTP software uses client/server processing and brokering software that allows transactions to run on different computer platforms in a network.
Networks of Communication
How do people at home connect to their work computers or even people at work connect to their home computer? Is it easy? Is it more trouble than it's worth? Stay with me, and we'll explore the vasts amounts of opportunities there are for YOU!
Wide Area Network
The internet is an example of a WAN. WANs consist of computers and LANs connected together to share resources. Generally, computers are connected to WANs by use of public networks such as phone lines and cable lines.
Local Area Network
If you have multiple computers connected to a router at your home and have run the Windows Network Setup Wizzard, you probably have a LAN. A LAN is a geographically close network (usually in the same building) of computers that can share resources. A LAN can be peer-to-peer or client/server. Your Windows machine can easily be set up as a peer-to-peer network node.
Intranet
An intranet uses TCP/IP (the basic protocal for communicating with websites) to connect users to a privaledged network. The network is usually for a corporation. The intranet is firewalled to prevent unauthorized access. Intranets look and feel like the internet, but it is only available for selected members.
Extranet
Very similar to intranets, extranets also have restricted access; however, extranets allow for various levels of access. Outsiders with valid credentials can enter an extranet and view information that they have authorization to view. An extranet can be viewed as an intranet that is extended to users outside the organization (and have more limited access).
Virtual Private Network
A VPN allows users to utilize a larger network (such as the internet) to connect to another location (LAN, computer, etc) securly using tunneling protocals that are encrypted. It creates a virtual network because it requires special tunneling encryption to establish the connection. Teachers here at UCF can use VPN software to connect to their work computers.
How do I connect to my computer remotely and EASILY?
There are several extremely easy technologies that are available to help helpless users such as yourself, but one that stands out amung them all as the easiest, most intuitive, and cheapest (free). Micrsoft Windows has attempted to create an easy to use remote desktop application, but the truth is, it is not easy to set up with a router and especially with multiple computers. (I have attached documentation on how to set up the remote desktop application and service that is available with Windows Professional and Media Center editions.)
Logmein.com provides an extremely useful and FREE service for remote desktop. I HIGHLY recommend it. All you have to do is install the software on the computer you want ot be able to control. You then, at a remote location, log into logmein.com and select the computer you want to connect to. The only technical problem I have had to overcome was that when you log into your computer, you are prompted to install things on a computer that you probably do not have access to do that with. To get over this, you simply click past the screens that ask you to install software and then once logged into your computer, but not yet in the remote desktop screen, you need to go to remote desktop preferences. From there, change the interface from Active-X to Java. This will allow you to connect using Java - which is usually installed on at least UCF computers.
The the Pro service adds easy filesharing and printer integration. These are very useful features, but really only worth it for people who are heavily dependent on this particular remote computer.
E-Business
This chapter looks at the revolution that technological advances in communication technologies has created for electronic (B2B). It is most important to understand how these new ways of conducting business necessitate changes in business processing of events as the nature of the events have changes (in some cases completely bypassing the need for human interactions). These business process changes necessarily create needs for new accounting of these processes and for new controls to placed on these processes. The increased use of automated business processes and communications based on the transfer of electronic data is to acheive greater efficiency in business processing.E-business connections :
- Back Office
- Internal processes such as distribution, manufacturing, and accounting
- http://www.cpatechnologyadvisor.com/article/article.jsp?siteSection=19&id=1247
Quickbook, a small business accounting software product, adds the ability to track issues relating to Workers' Compensation issues. As the author of this article notes, the ability to track these issues within previous versions of Quickbooks did not exist without painstaking "workarounds". This example of a "back office" software enhancement will most likely lead to a more efficient use of staff's time relating to this task.For many years, I’ve been wishing for an automated system of tracking, accruing, job costing, paying, and reporting on workers’ compensation in QuickBooks. I developed several workarounds for accruing and job costing workers’ comp, but, to be honest, these workarounds almost always required too much technical understanding from the user, and way too much babysitting of the process. So I only offered the workarounds for those who had no other choice. Alas, with recent updates to QuickBooks and its integrated payroll services, you can now handle pretty much everything you need for workers’ comp.
An Overview of Workers’ Compensation Using the Enhanced Payroll Service
QuickBooks provides a Workers’ Compensation Setup wizard that walks you through the setup of the Workers’ Compensation feature. This wizard prompts you to (1) assign default workers’ comp codes for each employee, (2) decide whether you want to exclude overtime premiums from workers’ comp premium calculations, and (3) enter an experience modification factor, if you have one.
Modes of Processing Business Events:
E-business: Security & Fraud
If your business is connected to the internet, it’s your responsibility to protect your business data and information against unwanted intruders. Sensitive information such as customer details, pricing lists, and personal records can all be stolen, corrupted or even destroyed unless protected properly.You should ensure that your connection to the internet is secure. Some issues to consider when securing your website are:
- working procedures
- virus protection software
- The Shield Pro 2006- BitDefender v10
- Norton AntiVirus
- spyware protection software
- Spyware Doctor- StopZILLA
- Spy Sweeper
- firewalls
A firewall is simply a program or hardware device that filters the information coming through the internetconnection into your private network or computer system. If an incoming packet of information is flagged by the filters, it is not allowed through.back up data
Things you need to know and do to operate safely online: For small business
Methods for capturing e-business events:
- Automated Manual Systems (4 steps)
- Business Event Occurs
- At the point of occurance for the business event, the information for the event will be recorded on a source document
- Record Event Data
- A batch of source document will be transferred to a data entry operator who will take the information from the source documents and enter the data, using an offline device, in a computerized format. The business event data are usually entered using an offline device. The resultion computerized format becomes the sales event data store.
- Update Master Data
- After all the data has been entered into the system, the sales event data store is brought to the computer to be processed, and any calculations and summerizations completed. This information is used to update the master data.
- Generate Output
- After all the calculations have been completed and the data updated, the system will periodically generate the applicable reports.
- The output is only as good as the last Master Update, which in turn is only as good as the last Batch Processing and so forth.
This form of automated system is a pure periodic system. The entire process uses a periodic mode of processing. A disadvantage of periodic mode systems is that the only time the master data is up to date is right after the processing has been completed. As soon as the next business event occurs, the master data is no longer up to date. As a result, a query capability is not provided for data that are used in a periodic mode system.- Online Transaction Entry (OLTE)- This system captures, validates and stores large amounts of transactions. It is optimized for data entry operations and consist of large amounts of relatively short amounts of short database transactions. For example, an Order - Entry system. The use of data entry devices to allow business event data to be entered directly into the information system at the time and place that the transaction occurs (p75). At the point of the business event, a computer input device is used to enter the event data into the data entry system rather than onto a source document. The input system usually also will serve as a printer that will then print document copies to serve the need of source documents. As business events occur, they are usually accumulated either on magnetic tape or on disk. Can be used in periodic or batch processing systems. Online transaction entry reduces redundancies in pure periodic mode processing. The OLTE is better than the Automated Manual System, however, the information is still not up to date at any given time for the decision makers.
- On Line Transaction Entry-- A type of computer processing in which the computer responds immediately to user requests. Each request is considered to be a transaction. Registering students for classes or updating employee benefits are examples of transaction processing.
- Online Real-Time (OLRT) (3 steps)- Systems that gather transaction data at the time of the occurence, update the master records essentially instantaneously, and provide the results arising from the transaction within a short amount of time (p77).
- 3 Steps
- Business event occurence and recording of event data
- Update master data
- Generate reports and support queries
- Online Transaction Processing (OLTP)- Handling transactions as soon as they occur providing immediate responses to users. This is especially useful for banks and insurance companies. Deposits, withdrawals and other transactions using ATMs are examples of online transaction processing.
There are multiple ways to define OLTP and they are as follows below:- A type of computer processing in which the computer responds immediately to user requests. Each request is considered to be a transaction. Registering students for classes or updating employee benefits are examples of transaction processing.
- Any number of concurrent users adding and modifying data. Typically includes order processing, banking, stocks, and e-commerce applications.
- A common term used to describe any form of transaction processing may involve communication devices and data processing environments.
- The primary use of databases such as Oracle, Sybase and Informix. Enables instant access of newly entered information throughout the enterprise.
Methods for conducting E-Business:
- E-mail
- The electronic transmission of non-standardized messages between two individuals who are linked via communications network (usually the internet or the intranet). This requires human interaction. Its unstructured nature as a communication mode makes data capturing more difficult and generally requires human translation and entry of the data, which increases the likelihood of error. Using web and Internet technologies in conducting the business activities. Also expanding end enhancing traditional business practices by means of the Internet. Electronic Mail (E-Mail, email) one of the most popular Internet services. Basically it's the transmission of text based messages. An email message can also contain more structured elements, like tables, images and multimedia. It can also be used to send various data files, by means of attachments.
- E-mail tends to be a very free-form mode of expression and a fairly casual and informal mode of communication. This unstructured nature of communication mode makes data capturing more difficult and generally requires human translation and entry of the data. This increases the likelihood of error and requires more stringent data control procedures to be in place. The E-mail essentially becomes a source document for use in the business event data processing. Organizations using e-mail as source documents also must have in place a mechanism to deal with unsolicited, non-document mail (SPAM). SPAM is flooding the Internet with many copies of the same message, in an attempt to force the message on people who would not otherwise choose to receive it. Most spam is commercial advertising, often for dubious products, get-rich-quick schemes, or quasi-legal services. Spam costs the sender very little to send -- most of the costs are paid for by the recipient or the carriers rather than by the sender.
- Despite the limitations, e-mail does have several characteristics that make it tolerable for some E-business events. From a sales standpoint, a targeted market can often be identified by locating an appropriate e-mail list. Much like their mailing list counterparts that are used for postal delivery, lists of e-mail addresses for individuals that are likely to be interested in a given product can be useful. Generally, if the marketing medium is e-mail, then the purchase request also will be transmitted in this manner.
- Electronic Document Management (EDM)
- The capturing, storing, management, and control of electronic document images for the purpose of supporting management decision making and facilitating business event data processing.
In general, business applications of EDM fall into two categories:1. Document storage and retrieval. For example, mortgages , deeds, birth certificates marriage licenses, banking-acocunt signature cards and other documenta are archived and made available to the public for such uses as titile searches. An EDM system stores the images of these items and diplays or prints a copy of them upon request.
A recent example of EDM is the Check 21 law that was enacted in 2004 to allow banks to substitute electronic images for paper checks. For more information on this law see http://www.federalreserve.gov/paymentsystems/truncation/
2.Business event data processing. For example, loan and insurance applications must pass through several stages, such as origination, underwriting, and closing. The EDM system can manage the workflow and route the documents to the appropriate people - even if these people are geographically dispersed.
Benefits of EDM include:
- reduced cost of handling and storing paper;
- improved staff productivity;
- superior customer service ;
- enhanced management of operational workflow;
- faster processing.
Applications with a high chance of success:
-a large amount of paper is produced and stored
-data must be scanned
-frequent access to the stored data from geographically dispersed locations is needed
-processing of the stored data are extensive and complex and takes place from multiple locations
The Textbook’s definition of Electronic Data Interchange (EDI) is: EDI is the computer-to-computer exchange of business data (i.e., documents) in structured formats that allow direct processing of those electronic documents by the receiving computer systems. However, reviewing the IT/IS existing literature, I found an alternative definition of EDI, that is more detailed, operational, and more accepted in practice.
Electronic Data Interchange (EDI), in broad terms, represents the replacement of business, administrative or other organizational documentation by standard electronic messages, which are passed directly by telecommunications from one organization’s computer system to another without ever existing in paper form.
Historically, EDI was originated primarily for finance and trading purposes as a means of speeding up and automating the transfer of information. Following its success, it has expanded to include a wide variety of other information such as that relating to general business, accountancy, health, education, and so on. (Williams et al 1997)
In addition, EDI has been found to have an effect on auditing, where there are control problems related to determining the boundaries of legal responsibilities, the establishments of audit trails, systems security, and so on. However, the main concern for traditional auditors facing an EDI environment, is the apparent erosion of control through the lack of visible evidence. For example, it is impossible to place a grid stamp on an electronic document and provide an authorization signature. Furthermore, as EDI enables information to transcend organizational boundaries, business functions in two organizations may overlap so that an audit trail may become ambiguous or even lost. For example, the transfer of liability for, or ownership of, goods and associated information are vague and the organizational boundaries are blurred in areas where the use of electronic reservations and bookings in the air freight and shipping industries, the use of Automatic Teller Machines (ATMs) to withdraw money in banking and the delivery of goods for customers with an electronic dispatch advice. (Maingot, 1997)
According to Mehta (1998), many companies are starting to take advantage of the EDI technology either due to potential benefits offered by EDI or due to customer pressures, and there are a number of risks and exposures that businesses need to be aware of when considering leveraging this technology. To mention few, total dependency on the system, loss of confidentiality of data, unauthorized transactions and fraud, concentration of control, reliance on third parties, and the potential legal issues are all exposures, that the control considerations, would include a whole set of controls should minimize them.
- Internet CommerceInternetInternet Commerce
- Google recently started a new online payment service called Checkout. It allows consumers to enter their personal and financial information only once (with Google) and purchase goods from other vendors that are associated with the Checkout program. Google forwards the payment to these vendors.
- Another example of Internet Commerce is Amazon.com. It was one of the first major companies to sell goods over the internet. Amazon began as an online bookstore, though it soon diversified its product lines, adding DVDs, music CDs, computer softwares, video games, electronics, like mp3 players, apparel, furniture, food, and more. Amazon has established separate websites in Canada, the United Kingdom, Germany, Austria, France, China and Japan and it ships globally on selected products.
- Internet market exchanges bring together a variety of suppliers in a given industry with one or more buyers in the same industry to provide internet commerce through organized markets. Suppliers can put their products online, generally feeding into electronic catalogs that allow the buyer(s) to sort through alternatives from different suppliers and electronically place an order. Internet market exchanges can be either private or public.
- The Internet is radically changing the nature of E-Business to the point that in the future, the Internet will become the dominant platform for not only E-Business , but EDI as well. Even though EDI is expected to survive and grow, the Internet shows far more potential growth.
- Two primary categories of e-Business exist over the Web: 1) business to consumer, or B2C (Internet stores, etc.), and Business-to Business. Internet commerce has traditionally referred to the first category, business to consumer likage, although recently more B2B commerce is taking place over the Internet.
- Business to business connections can be made either through direct access (very costly) or through an Internet Service Provider (virtually cost less). Some examples of ISP's are AOL, NetZero, BellSouth, and PeoplePC.
>* Other Internet Uses for Business
- Create direct linkage between customer and vendor, reduce costs for organizations.
- Internet Auction Market – provide an internet base for companies to place products up for bid or for buyers to put proposed purchases up for bid. eBay has become the fastest growing company in American history.
click here for eBay's Business Model- Most Internet auction sites specialize in person-to-person activity where individual sellers or small businesses sell their items directly to consumers. In these auctions, the seller — not the site — has the merchandise, and often, the site will not take responsibility for any problems that may arise between buyers and sellers.
- >> How is Internet Auction Works?
- >> · Most Internet auction sites require buyers and sellers to register first and obtain a “user account name” (or “screen name”) and password before they can make bids or place items for bid.
- >> · Some sites require sellers to agree to pay a fee every time they conduct an auction, whether the item is sold or not. Other sites charge a fee only when an item is sold.
- >> · Many sellers set a time limit on bidding and, in some cases, a “reserve price” — the lowest price they will accept for an item. When the bidding closes at the scheduled time, the item is sold to the highest bidder. If no one bids at or above the reserve price, the auction closes without the item being sold.
- >> · Some auction sites allow sellers to set a price at which a buyer can purchase the item without competing with other bidders. A buyer can choose to purchase the item for the price the seller has set, without bidding.
- >> · At the end of a successful auction, the buyer and seller communicate — usually by email — to arrange for payment and delivery.
- >>
- Internet Market Exchange – bring a variety of suppliers in a given industry with one or more buyers to provide internet commerce through organized markets. Basically, suppliers provide electronic catalogs and buyers can place orders electronically to avoid the purchase order process.
The Effect of E. Commerce on AuditingIn the past decade, an important characteristic of the current information age, or the digital age (as recently labeled), has been, foremost, the popular development of the Electronic Commerce (E-Commerce). Just as with almost every type of product and service that E-Commerce, the most accessible application that brings together the buyers and sellers, auditing, as an important professional service, couldn’t afford to stay static in such a dynamic and virtual market place.
In accounting and auditing literature, the impact of E. Commerce, whether in the form of a Business to Business (B2B), Business to Consumer (B2C), or Consumer to Consumer (C2C) has been emphasized. For example, Burr et al (2002) described the influence of the internet’s E-Commerce on auditing at Morgan Stanley, a multinational financial services corporation with 58,000 employees in 28 countries around the world.
He stated that: “At Morgan Stanley, our internal auditors share a unique control framework developed during the dot.com craze, and they proactively addressed the challenges presented during e-commerce boom by tailoring our methods to this unique form of business. These challenges that E-Commerce has imposed on today’s business environment has brought with it new issues for the entire organizations to face, and auditing is no exception, such issues as; security, application integrity, development process and the legal issues that involve conducting unusual business on-line. If this example does anything, it will definitely add to our understanding of how IS audit will, eventually, replace the traditional audit trails.
Miscellaneous (but important) Concepts:
VeriSign Inc (NASDAQ: VRSN) operates intelligent infrastructure services that enable and protect billions of interactions every day across the world’s voice and data networks. Every day, we process as many as 18 billion Internet interactions and support over 100 million phone calls. We also provide the services that help over 3,000 enterprises and 500,000 Web sites to operate securely, reliably, and efficiently. VeriSign is a global enterprise with offices throughout the Asia-Pacific region, Europe, Latin America, and North America, supported by a widespread international network of data centers and operations centers.
As next-generation networks emerge, VeriSign will be there, deploying the intelligent infrastructure services necessary for everything from RFID supply chains, to inter-enterprise voice over Internet Protocol (VoIP) to the seamless delivery of mobile content. Whether you’re a carrier looking to rapidly deploy new services, a Fortune 500 enterprise needing comprehensive, proactive security services, or an organization looking to evolve its trading-partner network, we can help. We’re VeriSign. Where it all comes together.
Here is a video explaining the importance of VeriSign. VeriSign Corporate Video
What is the difference between Online Transaction Processing and Online Real-Time Processing?
An Online Transaction Processing (OLTP) unit will retreive data from the master data and then use that data for a particular transaction. The master database will not be updated until the processing is complete. Online Real-Time Processing (OLRTP)would send the intermittent data to the server for processing - creating a greater need for powerful processing on the receiving server end. The text book uses automatic teller machines to exemplify OLTPs.Today's online transaction processing increasingly requires support for transactions that span a network and may include more than one company. For this reason, new OLTP software uses client/server processing and brokering software that allows transactions to run on different computer platforms in a network.
Networks of Communication
How do people at home connect to their work computers or even people at work connect to their home computer? Is it easy? Is it more trouble than it's worth? Stay with me, and we'll explore the vasts amounts of opportunities there are for YOU!Wide Area Network
The internet is an example of a WAN. WANs consist of computers and LANs connected together to share resources. Generally, computers are connected to WANs by use of public networks such as phone lines and cable lines.
Local Area Network
If you have multiple computers connected to a router at your home and have run the Windows Network Setup Wizzard, you probably have a LAN. A LAN is a geographically close network (usually in the same building) of computers that can share resources. A LAN can be peer-to-peer or client/server. Your Windows machine can easily be set up as a peer-to-peer network node.
Intranet
An intranet uses TCP/IP (the basic protocal for communicating with websites) to connect users to a privaledged network. The network is usually for a corporation. The intranet is firewalled to prevent unauthorized access. Intranets look and feel like the internet, but it is only available for selected members.
Extranet
Very similar to intranets, extranets also have restricted access; however, extranets allow for various levels of access. Outsiders with valid credentials can enter an extranet and view information that they have authorization to view. An extranet can be viewed as an intranet that is extended to users outside the organization (and have more limited access).
Virtual Private Network
A VPN allows users to utilize a larger network (such as the internet) to connect to another location (LAN, computer, etc) securly using tunneling protocals that are encrypted. It creates a virtual network because it requires special tunneling encryption to establish the connection. Teachers here at UCF can use VPN software to connect to their work computers.
How do I connect to my computer remotely and EASILY?
There are several extremely easy technologies that are available to help helpless users such as yourself, but one that stands out amung them all as the easiest, most intuitive, and cheapest (free). Micrsoft Windows has attempted to create an easy to use remote desktop application, but the truth is, it is not easy to set up with a router and especially with multiple computers. (I have attached documentation on how to set up the remote desktop application and service that is available with Windows Professional and Media Center editions.)